Full AIFMD compliance still some way off

21 July 2014

Full compliance is still some way off as AIFMD authorisation deadline arrives, according to new BNY Mellon survey.

New research by BNY Mellon highlights a compliance shortfall among alternative investment funds (AIFs) on the eve of the deadline for Alternative Investment Fund Managers Directive (AIFMD) authorisation.

While 82% of managers canvassed confirmed the required AIFM structure has been established to meet the 22 July deadline, 44% will not have received authorisation from their local regulator by that date.

The new survey highlights that a significant proportion of managers will have work left to complete in respect of key elements of the AIFMD regulations. For example, 31% still need to implement risk and control systems, 36% have yet to update fund documentation, and 38% have yet to appoint a depository.

As a consequence of their experiences in respect of AIFMD compliance, the survey indicates that fund managers are now bracing themselves for higher-than-expected levels of cost and complexity when it comes to meeting requirements around the UCITS V (undertakings for the collective investment in transferable securities) regulation, which seeks to align the UCITS regulatory framework with certain aspects of AIFMD and is expected to be transposed into local law in 2016.The new BNY Mellon survey, conducted in conjunction with global business consulting firm FTI Consulting, canvassed 58 firms drawn from across Europe, the United States and Asia that operate, or are considering operating, a fund that would be subject to AIFMD.

The survey respondents – comprising a mix of small, medium and large fund managers – collectively hold over $406 billion in assets under management. 32% of these managers operate more than five AIFs with 22% of AIFs impacted by AIFMD.

Commenting on the survey’s findings, Hani Kablawi, head of Asset Servicing for Europe, Middle East & Africa at BNY Mellon, said: ‘While AIFMD is upon us, many funds have attained full compliance. However, it has been clear since we began our surveys last summer that the industry has consistently been playing catch up as firms have sought to hit tomorrow’s deadline. It hard to say at this juncture if this pattern of delayed adoption will have a meaningful or lasting impact – but it is clear that all market participants, regulators included, are looking to be pragmatic when it comes to implementing the necessary changes.’